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Friday, July 3, 2009

Stock of the Week: Sky City Entertainment Group

Seppuku looking like an attractive alternative to doing nothing

I am not asking for a ritual Seppuku that originated from Japanese Samurai Swordsmen and is still practiced occasionally by shamed Japanese CEO's today but bloody hell I would like at least an attempt at showing responsibility and least some sense of shame when our business leaders do wrong. (gee I have been writing some negative stuff over the last few days - I will be back to stocks next column, I promise)

New Zealand leaders, especially the CEOs of our listed companies are renown for not taking responsibility for making mistakes and costing shareholders precious dollars and company reputations, in fact some have made an art of the practice.

Our company and cultural history is unfortunately littered with a very long list of them.

I have one such man in my sights for special attention, John Bongard from Fisher & Paykel Appliances [FPA.NZ]

When the company announced a few days back the appointment of two new board members from their largest shareholder and recent savior of the company from collapse Haier, one might have expected JB to take a running leap off a short board table and announce he would be taking early retirement from his CEO position.

It seems that it s not to be but that is not unusual in these days of avoidance of responsibility

John Bongard borrowed too much money too quickly to move the New Zealand domiciled and created company to overseas manufacturing bases and buying an overpriced European appliance maker a few years ago with borrowed money certainly didn't help -sure expand, but do so in a financially prudent and methodical manner without putting your company and your shareholder's moola at risk.

The thing is you eventually have to pay the money back or default on your loans as FPA did.

Go on, while I'm having a bitch I should be having a go at the rest of the board as well because they voted along with JB.

Lets hope the two Chinese gentlemen that have just put their feet under the board table can sort out the bottom drawers from the top loaders.

The company will simply limp along in the same hopeless direction they have under Bongard if they don't.

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Managing by Accountability: What Every Leader Needs to Know about Responsibility, Integrity--and Results by M. David Dealy
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c Share Investor 2009

Thursday, July 2, 2009

Bruce Sheppard: Mark Weldon - "The Sherrif of Nottingham"

Something that I have been banging on about for years is the lack of independence of Mark Weldon and his New Zealand Stock Exchange [NZX.NZ] and the very lose structures built around Mark's fiefdom that are supposed to protect shareholders, mostly smaller ones like me.

Its partner in crime, the Securities Commission, has as much bite as Jaws with dentures and is as hands off as a doctor treating a patient with swine flu when it comes to any enforcement.

In Bruce Sheppard's column this last Wednesday he manages to articulate my feelings with alot more detail, finesse and institutional fact.

"The listing rules allowed NZX to grant waivers, of the rules. Shit, this meant that NZX could enforce its rules on everyone else but waive them for themselves. Worse as NZX investigated breaches and prosecuted them, judged the results of the prosecution and fined the offenders, this too created a terrible conflict. How would NZX treat itself if it were to breach the rules?" Read the full article here.

The waiving of NZX "rules" has been high in stockmarket news of late as they have been so busy waiving their own rules for various capital raisings that smaller shareholders are wondering whether it will be their company next that will dilute their shareholding in favour of bigger shareholders.

Essential reading for every small shareholder.

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c Share Investor 2009

Wednesday, July 1, 2009

Cadbury could learn a thing or two from 1980's Coca Cola experiment

When you mess around with an iconic product that your customers just love to obsession just because you think you can save money by changing its appearance, packaging and well and truly tried and tested formula you risk losing that iconic status and your reputation that took generations to build and your customers.

Cadbury PLC [CBRY.LSE] have done just that by changing packaging sizes of their family block chocolates while keeping them the same size of the old by using different packaging and the most brain dead thing of all changing the taste of their very successful essential ingredient that has made them the brand to go to when you think of chocolate, the ingredient in all their products, chocolate itself!

Forget for a moment that I am a pure obsessional when it comes to chocolate, my body is part blood, water, Crunchie Bar, Dairy Milk, Moro Bar and a list as long as your arm in Cadbury products but just consider what Cadbury have done.

The product that has made them the leader in chocolate for generations has had its successful formula changed,they have substituted the very essence of chocolate, palm oil for animal fat, supposedly to save money.

That is like taking the sugar out of Coca Cola and still calling it Coke!

Business 101, you don't change a successful product that your customers would die for just to save money. Trust me, they will pay more for it.

Executives at Cadbury head office are perhaps too young to remember another iconic product that was tampered with in the mid 1980s, the aforementioned Coca Cola from the Coca Cola Company [KO.NYSE].

The formula for that iconic drink was sweetened to taste more like Pepsi and launched on customers as "New Coke" and was an instant failure. Customers protested, Coke didn't listen,

they said the new product was better and consumers just needed to get used to it but Coke management didn't figure on how obsessive their customers were (duh!) and they simply stopped buying the new Coke. Two months latter Coca Cola relented and re-launched old Coke as "Coca Cola Classic" and the two products existed side by side on the supermarket shelf for a number of years. It is no longer sold in the United States.

This should be a lesson for Cadbury who must have execs in the marketing department of their Schweppes division that know about this famous marketing blunder, they sell their own iconic lemonade and other drinks products - the Coke story from the 1980s is taught in business schools around the globe about what not to do when in business.

"Those that don't learn from the lessons of the past are doomed to make the same mistakes".

Cadbury should learn from their mistake, it is already costing them in lost sales and is going to cost them dearly in the long-term if they don't rectify their decision to make a change.

I am a life long consumer of their former delicious products and I will no longer be buying them.

They just don't taste the same.

Its Whittakers for me!

See the new Whittaker's TV Advertising comparing Cadbury to Whittakers.

Disc I love chocolate

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Cadbury's Purple Reign: The Story Behind Chocolate's Best-Loved Brand by John Bradley
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c Share Investor 2009

Share Investor

Friday, July 3, 2009

Stock of the Week: Sky City Entertainment Group

Seppuku looking like an attractive alternative to doing nothing

Thursday, July 2, 2009

Bruce Sheppard: Mark Weldon - "The Sherrif of Nottingham"

Wednesday, July 1, 2009

Cadbury could learn a thing or two from 1980's Coca Cola experiment

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